We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Employment essentials: July 2017's top 5

Gowling WLG's employment, labour & equalities experts bring you the latest top five employment law developments that may affect your business - what they are, and what you can do about them.

1. Tribunal fees abolished

On 26 July, the Supreme Court ruled unanimously that the introduction of tribunal fees in 2013 was unlawful and must be quashed on the basis the fees have the effect of preventing access to justice and are indirectly discriminatory. The immediate consequence of this important judgment is that tribunal and Employment Appeal Tribunal fees cease to be payable as of 26 July with fees already paid needing to be reimbursed.

The Supreme Court accepted that the purposes behind the introduction of fees were potentially legitimate - transferring the cost burden to the 'users' of the tribunal system, incentivising earlier settlements, and discouraging weak or vexatious claims. However, the Lord Chancellor could not lawfully impose whatever fees he chose in order to achieve those purposes. In light of the 70% decrease in the number of tribunal claims since 2013, the Supreme Court concluded that the fees imposed are, in practice, unaffordable and far too high, preventing even people who can afford them from pursuing claims for small amounts and non-monetary claims. As such they prevent access to justice and are accordingly unlawful "ab initio", in other words from the outset.

As regards employment status, the review rejects the suggestion that the three-tier approach to employment status (employee, worker and self-employed) should be replaced by a binary division between employment and self-employment, similar to the tax system.

The report considers that the intermediate 'worker' status is helpful in allowing basic protections to be applied to less formal employment relationships. However, in the interests of clarity it recommends introducing the term 'dependent contractor' to refer to those who have 'worker' status but do not have 'employee' rights. Also, 'worker' ('dependent contractor') status should not be restricted to those who are required to perform work personally. Instead the principle of 'control' should be of greater importance, with legislation outlining what this means in a modern labour market, which the review suggests is not simply to be seen as the supervision of day-to-day activities.

The report also recommends that the burden of proof in cases where employment status is in dispute should be placed on the employer, who would have to prove that the claimant is not entitled to the employment rights claimed.

As for the interplay of employment rights and taxation, the review suggests that the definition of self-employment for employment law and tax purposes should be aligned so that being employed for tax purposes would mean that an individual is either an employee or a dependent contractor.

Other recommendations include:

For 'platform workers' - i.e. 'gig economy' workers who provide their services through apps and other digital systems - the report stresses the need to ensure there is 'genuine two-way flexibility'. In particular, the definition of 'working time' for the purpose of the national minimum wage (NMW) would have to be adapted, since it cannot be right that an individual could log on to an app when they know that there is no work and expect to be paid;

'Dependent contractors' to have the right to a written statement of terms;

Imposition of a higher NMW for zero- and short-hours workers;

Use of 'rolled-up' holiday pay, receiving a premium on their pay instead of paid time off (currently unlawful under EU law);

Agency workers to have the right to request a direct contract of employment after 12 months with the same hirer, which the hirer would be obliged to consider reasonably;

Zero-hours workers to be entitled to request a contract that guarantees hours which better reflect the actual hours worked after 12 months; and

Statutory sick pay (SSP) reform.

It is expected, though not yet confirmed, that the Government will consult in the Autumn on the recommendations it wishes to take forward.

On 10 July, the Court of Appeal gave its first guidance on what 'in the public interest' means in deciding whether a person makes a disclosure that gives them whistle-blower protection.

2013 changes to the protection afforded to whistleblowers mean that an individual must have a reasonable belief that the disclosure they are making, to whoever they make it, is ''in the public interest'.

A driver for this change was to prevent an individual from benefitting from whistleblowing legislation by relying on a self-serving disclosure of a breach of their own contract of employment (a Parkins v Sodexho Ltd claim). But what does "in the public interest" mean?

Back in 2015, the Employment Appeal Tribunal (EAT) in Chesterton Global Ltd (t/a Chestertons) v Nurmohamed held that an individual reasonably believed that his disclosure relating to an alteration to accounting figures, which negatively affected his and 100 other senior managers' commissions, was 'in the public interest'. In particular, 'the public' can refer to a subset of the general public, even one composed solely of employees of the same employer. Also, it did not matter that the individual was mostly motivated by concern about his own position.

The 'in the public interest' test as stated by the EAT set a very low hurdle indeed with workers being able to claim whistleblowing protection for disclosure of a breach of their own contract of employment as long as they can show some element of concern for colleagues in the same position.

The Court of Appeal has now upheld the finding that Mr Nurmohamed had a reasonable belief that his disclosures about his employer's manipulation of profit and loss accounts were made in the public interest, despite his personal motivation in so doing (i.e. the effect this would have on his commission payments). The tribunal had identified a number of features that made it reasonable to regard disclosure as being in the public interest as well as in the personal interest of the worker - specifically, the number of employees affected; the nature of the wrongdoing, which involved large sums of money; and the fact that it was deliberate.

While the Court of Appeal upheld the earlier tribunal and EAT decisions, it stressed that 'in the public interest' is a broad and fluid concept which depends very much on the circumstances of each case. The numbers affected is merely one factor that may be taken into account and not conclusive.

While a degree of flexibility is desirable, a multifactorial test leaves unhelpful uncertainty. As regards the multi-factorial test identified by the Court of Appeal:

The numbers in the group whose interests the disclosure served - Where is the tipping point? How is this to be judged?

The nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed - Does this mean that some rights of the individual in their relationship with their employer are more important than others?

The nature of the wrongdoing disclosed - the Court said there is a difference between deliberate wrongdoing as against inadvertent wrongdoing, even though the effects may be the same for a number of people.

The identity of the alleged wrongdoer - the larger or more prominent the wrongdoer in terms of the size and nature of its relevant community (ie staff, suppliers, customers), the more likely a disclosure will engage public interest - but does that confuse things that could be of interest to the public with "in the public interest"?

While the introduction of the 'in the public interest' requirement is the best known of the 2013 changes to whistleblowing protection, it by no means was the only significant change. Since 2013, protection extends to a worker who is subjected to detriment on whistleblowing grounds by another worker (very widely defined for whistleblowing purposes) or agent of his employer. In addition, a co-worker who has victimised a whistleblowing colleague may be personally liable for damages.

This month in International Petroleum Ltd and ors v Osipov and ors, the EAT upheld the finding that a CEO was unfairly dismissed by his employer on account of protected disclosures relating to a tender for oil exploration contracts in Niger. The EAT further upheld the employment tribunal's finding that two non-executive directors (NEDs) of the employer company were personally liable for detriment, as they were instrumental in the decision to dismiss the CEO. In the EAT's view, the tribunal had been entitled to hold the two NEDs and the company jointly and severally liable for the losses which flowed from the dismissal amounting to around £1,745,000 (remember the unfair dismissal cap does not apply in whistleblowing cases).

In this case, NED (A) was also the majority shareholder in the employer and both NEDs exercised what were effectively management functions. The evidence clearly pointed to the NEDs directing the dismissal of the CEO after he made a series of protected disclosures. In this case there was a 'smoking gun' of an email sent by NED (A) intended to be sent to NED (B) but mistakenly sent to the CEO instructing that he should be removed!

In reaching its decision the EAT rejected the NEDs' argument that they could not be personally liable for the decision to dismiss and the losses flowing from it. The EAT distinguished between dismissal within the meaning of the unfair dismissal provisions of the ERA 1996 (which is excluded from the ambit of detriment claims) and dismissal which is not within the meaning of those provisions (and so which could form the basis of a detriment claim). The NEDs' actions of giving an instruction to dismiss and implementing that instruction fell within the latter category, and so were actionable as a detriment claim. Also, there was no provision in law or policy relieving the NEDs of their personal liability to pay compensation for the losses flowing from the detriments simply because a claim for unfair dismissal could also be brought against the employer company.

It is likely to be an unusual case where an employee will wish to pursue a claim and seek a remedy against a fellow worker for a whistleblowing detriment amounting to dismissal, rather than only pursuing the claim against the employer. But, as the EAT held, there is no principled reason for excluding it. Workers and agents be warned you are not relieved of liability for detriments amounting to dismissal simply because an unfair dismissal claim is also pursued against the employer.

This case also serves as yet another reminder of the need for care to ensure emails are sent to their intended recipient!

5. Brexit: European Union (Withdrawal) Bill 2017-19

On 13 July, the Government introduced the European Union (Withdrawal) Bill 2017-19 in Parliament - a very utilitarian title. Formerly known as the more flamboyant 'The Great Repeal Bill', it has three central functions:

The repeal of the European Communities Act 1972 and the end of the supremacy of EU law after the day the UK withdraws from the EU;

Conversion of EU law into UK law so that the UK's legislation retains a functioning statutory framework after exit day. The Bill purports to do this by retaining and preserving EU-derived domestic legislation, EU legislation and treaties in UK law as they stand on exit day. In addition, the binding nature of existing judgments of the Court of Justice of the European Union (CJEU) that apply immediately before Brexit. Decisions of the CJEU will have the same precedent status as decisions of the Supreme Court; and

Creating powers allowing ministers through secondary legislation to amend existing legislative provisions in order to ensure UK legislation functions appropriately, prevents or remedies breach of international treaty obligations and gives effect to the withdrawal negotiations.

The Bill is expected to receive its second reading, after which Parliament will begin to debate it, on 7 September.

To accompany the Bill, the Department for Exiting the EU has published a series of factsheets on its effects, including Factsheet 7 on workers' rights following Brexit

The factsheet describes the Government's commitment to ensuring that worker's rights enjoyed under EU law will continue to be available under UK law following Brexit. Decisions of the CJEU prior to Brexit will have the same precedent status as decisions of the Supreme Court when determining the meaning of 'retained EU law' - in other words, EU law that has been transposed into UK law. This means that the Supreme Court can, if it so decides, overrule them, although the factsheet points out that it is very rare for the Supreme Court to overturn its own precedents. Case law emerging from the CJEU after Brexit will not be binding but courts and tribunals will be able to take it into account in the same way as they currently do for any other foreign judgment.

In the Frequently Asked Questions section, the Government clarifies the intended power to make secondary legislation. It says that this will not be used to change workers' rights, merely to "correct legislation to ensure it is fit for purpose after exit".

Related topic hubs

Compare jurisdictions: Arbitration

“The new ACC Newsstand is one of the best e-resources that I have encountered in 21 years of practicing Employment Law. The information is timely, helpful and easy to navigate. Thank you for offering it and please continue it indefinitely!!”